THE DCIT, ,CEN CIR -3, V. SHRI Shayam M. Majithia l/h of M.H.Majithia,

ITSSA 70/AHD/2000

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8287 (ITAT-AHMEDABAD)
• Duration Of Justice: 12 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-08-2012
• Assessment Year: misc
• Appeal Filed On: 28-06-2000
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K S PANDYA
• Keywords: Unexplained investment; Income from undisclosed sources; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND SHRI A. MOHAN ALAN KAMONY, AM) IT(SS)A NO.70/AHD/2000 BLOCK PERIOD: AY 1988-89 TO 12-08-1997 THE D. C. I. T., CENT. CIR-3, 2 ND FLOOR, YASHKAMAL BUILDING, SAYAJIGUNJ, BARODA 390 005 VS LATE SHRI MAHENDRAKUMAR MOHANLAL MAJITHIA, L/H SHRI SHYAM M. MAJITHIA, C/O. SOTEX, NEAR SHANTIPARK, GNFC TOWNSHIP ROAD, BHARUCH P. A. NO. - (APPELLANT) (RESPONDENT) APPELLANT BY SHRI B. K. S. PANDYA, CIT DR RESPONDENT BY SHRI S. N. SOPARKAR, WITH MRS. URVASHI SHODHAN, AR DATE OF HEARING: 28-08-2012 DATE OF PRONOUNCEMENT: 31-08-2012 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A ) IN APPEAL NO. CAB/IV-132/99-2000 DATED 29-03-2000 PASSED U/S 158 BC (C) READ WITH SECTION 158 BC (B) OF THE IT ACT FOR THE BLOCK PERIOD AY 1988- 89 TO 12-08-1997. 2. THE ASSESSEE IS AN INDIVIDUAL ON WHOM SEARCH AC TION HAD BEEN CONDUCTED U/S 132 0F THE ACT BY ISSUANCE OF WA RRANT OF AUTHORIZATION ON 12-08-1997. SUBSEQUENTLY, NOTICE U/S 158 BC (1) (II) OF THE ACT WAS SERVED ON THE ASSESSEE ON 25-09-1997 IN RESPONSE TO IT (SS)A NO.70/AHD/2000 (BLOCK PERIOD AY 1988-89 TO 12-08-1997) DCIT CENT. CIR-3, BARODA VS LATE MAHENDRA M. MAJITH IA 2 WHICH THE ASSESSEE FURNISHED RETURN OF UNDISCLOSED INCOME OF RS.1,00,50,000/- FOR THE BLOCK PERIOD AY 1988-89 TO 12-08-1997. HOWEVER THE LEARNED AO MADE VARIOUS ADDITIONS ALONG WITH THE ADDITION OF RS. 10,52,228/- TOWARDS UNDISCLOSED ASS ETS AND RS. 55,44,696/- TOWARDS PROFIT FROM UNACCOUNTED CASH SA LES OF RS. 2,41,07,376/-. ON APPEAL BEFORE THE LEARNED CIT(A) BOTH THESE ADDITIONS WERE DELETED WITH THE FINDING THAT THESE WERE PART OF THE DISCLOSURE MADE BY THE ASSESSEE FOR RS. 1,00,50,000 /- IN THE RETURN OF UNDISCLOSED INCOME FILED BY THE ASSESSEE. 3. THE REVENUE HAS RAISED TWO GROUNDS IN ITS APPEAL AND THEY ARE REPRODUCED HEREIN BELOW FOR ADJUDICATION. 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE DELETE THE ADDITION MADE ON ACCOUNT OF UNEXPLAI NED ASSETS OF RS.10,52,228/- 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO DELETE THE ADDITION OF RS.55,44,696/- BEING PROF IT ON UNACCOUNTED CASH SALES OF RS.2,41,07,376/-. 4. GROUND NO.1: DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED ASSETS OF RS.10,52,228/-:- DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, THE LEARNED AO NOT BEING SATISFIED BY THE EXPLANATION OF THE AS SESSEE, FURTHER SOUGHT CLARIFICATION WITH RESPECT TO THE FOLLOWING ISSUES:- I) THE ASSESSEES FAILURE TO SUBMIT CONFIRMATION OF SHRI K. A. PATEL & CO. FOR THE DIFFERENCE OF RS.2 LAKHS WITH IT (SS)A NO.70/AHD/2000 (BLOCK PERIOD AY 1988-89 TO 12-08-1997) DCIT CENT. CIR-3, BARODA VS LATE MAHENDRA M. MAJITH IA 3 DOCUMENTARY PROOF FOR THE INVESTMENT OF RS.8 LAKHS IN ROOPNAGAR DECLARED WHICH WAS SUBSEQUENTLY REDUCED T O INVESTMENT OF RS.6 LAKHS. II) CONSTRUCTION COST OF RS.3 LAKHS CARRIED OUT AT HALDARWA LAND WHICH WAS CLAIMED TO BE INCURRED BEFORE THE GENERATION OF UNACCOUNTED INCOME. III) THE ASSESSEES FAILURE TO PROVE SOURCE OF INCO ME OF ACQUISITION OF LAND AT NAUGAMA FOR RS.2 LAKHS. IV) THE AMOUNT OF RS.3,23,824/- PERTAINING TO SHUKL A TIRTH WHICH WAS MENTIONED IN AT PAGE NO.41 OF ANNEXURE B- 14 DATED 4.6.96 WAS ADDITIONAL UNDISCLOSED INCOME AS T HIS INCOME WAS BEFORE THE CUT OF DATE. THE AO HAD RELIE D ON THE LETTER DATED 14.5.1999 FOR TREATING THIS AMOUNT AS UNEXPLAINED. V) THE APPELLANT HAS NOT GIVEN ANY EXPLANATION IN R ESPECT OF AMOUNT OF RS.28,404/- MENTIONED AT PAGE-8, ANNEXURE B- 14. ALL THE AFORESAID AMOUNTS AGGREGATED TO RS.10,52,22 8/-. SINCE THE ASSESSEE COULD NOT FURNISH PROPER CLARIFICATION, TH E LEARNED AO MADE ADDITION OF RS.10,52,228/- AS UNDISCLOSED ASSETS. H OWEVER, THE LEARNED CIT (A) DELETED THE ADDITION SINCE THESE AM OUNTS HAVE ALREADY MADE PART OF THE TOTAL UNDISCLOSED ASSETS/E XPENDITURE OF RS.105,05,911/-. THE RELEVANT PART OF THE FINDINGS OF THE LEARNED CIT(A() IS REPRODUCED HEREIN BELOW: 12. IT IS OBSERVED THAT THE ASSESSING OFFICER HAS MADE ADDITION OF RS.10,52,228/- BEING INVESTMENTS/ EXPEN DITURE MADE BY THE APPELLANT WHICH WERE EITHER NOT EXPLAIN ED OR INCURRED BEFORE THE PERIOD FOR WHICH UNDISCLOSED IN COME WAS DISCLOSED. THIS UNEXPLAINED INVESTMENT/EXPENDITURE INCLUDED OF RS.5 LAKHS MADE IN CONSTRUCTION OF HALDARWA LAND AN D IT (SS)A NO.70/AHD/2000 (BLOCK PERIOD AY 1988-89 TO 12-08-1997) DCIT CENT. CIR-3, BARODA VS LATE MAHENDRA M. MAJITH IA 4 ACQUISITION OF NAUGAMA LAND. IT IS SEEN THAT THE AP PELLANT HAS NOT SUBSTANTIATED THAT THESE INVESTMENTS/EXPENDITUR E WERE MADE PRIOR TO THE PERIOD OF UNACCOUNTED SALES AND T HEREFORE, THE ASSESSING OFFICER WAS CORRECT IN TREATING THE S AME AS UNEXPLAINED ASSETS/EXPENDITURE. HOWEVER, HE CANNOT NOW AGAIN ADD THESE AMOUNTS INTO THE UNDISCLOSED ASSET/EXPENDITURE FOUND IN THE CASE OF THE APPELLAN T AS THESE ASSETS/EXPENDITURE ARE ALREADY PART OF UNDISCLOSED ASSETS OF RS.1.05,05,911/-. REGARDING EXPENDITURE OF RS.3,23, 824/- MADE IN SHUKLA TIRTH AS PER PAGE 41 OF ANNEXURE B-14 DAT ED 4.6.96, IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE A PPELLANT HAS MADE UNACCOUNTED SALES OF 80.33 LACS UPTO ASSESSMEN T YEAR 1997-98. THUS, THE UNACCOUNTED INCOME EARNED BY THE APPELLANT UPTO THIS ASSESSMENT YEAR @ WILL BE RS.18 .50 LACS. AS THE IMPUGNED EXPENDITURE PERTAINS TO A. Y. 1997- 98, THE APPELLANT IS ENTITLED TO SET OFF OF THIS EXPENDITUR E AGAINST UNACCOUNTED INCOME OF RS.18.50 LACS. THUS, THERE CA NNOT BE ANY SEPARATE ADDITION ON ACCOUNT OF THIS EXPENDITUR E. SIMILARLY EXPENDITURE OF RS.28,404/-PERTAINING TO 28 TH JULY (YEAR IS NOT MENTIONED) CAN ALSO BE CONSIDERED AS COVERED BY THE PERIOD UPTO ASST. YEAR 1997-98 OR TO A LATER PERIOD. BESID ES THIS AMOUNT IS VERY SMALL AND DISCLOSURE OF SUBSTANTIAL PORTION OF ASSETS/EXPENDITURE WAS MADE ON LUMP SUM BASIS WITHO UT EVIDENCE FOUND DURING THE SEARCH. REGARDING DIFFERE NCE OF RS.2 LAKHS IN RESPECT OF INVESTMENT IN ROOPNAGAR, IT IS SEEN THAT DURING THE SEARCH, THE APPELLANT STATED ON 12.8.97 THAT UNACCOUNTED INVESTMENT IN 8 FLATS AT ROOPAM NAGAR W AS RS.8 LAKHS WHICH WAS WORKED OUT AFTER REDUCING ACCOUNTED PAYMENTS OF RS.6 LAKHS FROM TOTAL PAYMENTS OF RS.14 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, THE APPELLANT CL AIMED THAT THE RECORDED INVESTMENT IN THESE FLATS ARE RS.8 LAK HS AND UNRECORDED INVESTMENT IN THESE FLATS ARE RS.6 LAKHS AND ACCORDINGLY IN THE STATEMENT BEFORE THE ASSESSING O FFICER IN THE UNDISCLOSED ASSETS THE APPELLANT HAS SHOWN UNDISCLO SED INVESTMENT OF RS.6 LAKHS IN RESPECT OF THESE FLATS. THE ASSESSING OFFICER HAS NOT ACCEPTED THIS CONTENTION AS ACCORDING TO HIM THE APPELLANT FAILED TO SUBMIT CON FIRMATION OF K. A. PATEL & CO. FOR THE DIFFERENCE OF RS.2 LAKHS WITH DOCUMENTARY PROOF. IT IS OBSERVED THAT THE ASSESSIN G OFFICER HAS NOT DISPUTED THE CLAIM OF THE APPELLANT THAT RS .8 LAKHS ARE IT (SS)A NO.70/AHD/2000 (BLOCK PERIOD AY 1988-89 TO 12-08-1997) DCIT CENT. CIR-3, BARODA VS LATE MAHENDRA M. MAJITH IA 5 RECORDED IN REGULAR BOOKS. THE CONFIRMATION OF K. A . PATEL & CO. IS NOT RELEVANT UNLESS THE ASSESSING OFFICER HAS SO ME ADVERSE MATERIAL. THEREFORE, THERE CANNOT BE ANY ADDITION O F RS.2 LAKHS ON UNACCOUNTED ASSETS OF THE APPELLANT IN RESPECT O F ROOPNAGAR FLATS. THUS, UNDISCLOSED ASSET/EXPENDITUR E OF THE APPELLANT WILL BE RS.1,05,05,911/-. 5. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNE D AO AND PRAYED THAT THE SAME MAY BE SUSTAINED. 6. ON THE OTHER HAND, THE LEARNED AR VEHEMENTLY ARG UED STATING THAT THE LEARNED CIT(A) HAD EXAMINED THE FACTS IN D ETAIL AND HAS CATEGORICALLY MADE A FINDING THAT THE AMOUNT OF RS. 10,52,288/- WAS PART OF THE UNDISCLOSED ASSETS/EXPENDITURE DECLARED BY THE ASSESSEE FOR RS.1,05,05,911/- AND, THEREFORE, HIS ORDER MAY BE SUSTAINED. 7. WE HAVE HEARD BOTH THE SIDES AND CAREFULLY PERUS ED THE MATERIAL ON RECORD. FROM THE FACTS OF THE CASE IT I S APPARENT AS DELIBERATED BY THE LEARNED CIT(A) THAT THE AMOUNT O F RS.10,52,228/- HAD ALREADY BEEN DISCLOSED AS UNDISCLOSED ASSETS OF THE ASSESSEE. THE LEARNED CIT(A) HAD EXAMINED THESE FACTS IN DETA IL AND CATEGORICALLY RECORDED HIS FINDING IN HIS ORDER THA T THESE ASSETS HAVE BEEN MADE PART OF THE UNDISCLOSED ASSETS DECLARED B Y THE ASSESSEE. FURTHER THE REVENUE COULD NOT COME OUT WITH ANY CON VINCING MATERIALS OR ARGUMENTS TO CONTROVERT THE FINDINGS O F THE LEARNED CIT(A). THEREFORE, WE DO NOT HAVE ANY INCLINATION T O INTERFERE WITH HIS IT (SS)A NO.70/AHD/2000 (BLOCK PERIOD AY 1988-89 TO 12-08-1997) DCIT CENT. CIR-3, BARODA VS LATE MAHENDRA M. MAJITH IA 6 ORDER AT THIS STAGE. ACCORDINGLY, THIS GROUND OF AP PEAL RAISED BY THE REVENUE IS DISMISSED. 8. GROUND NO.2: DELETING THE ADDITION OF RS.55,44,696/- BY THE LEARNED CIT(A):- DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE CONCEDED THAT THE UNACCOUNTED CASH SALES DURING THE BLOCK PERIOD WAS RS.4,23,33,256/- WHICH WAS ACCEPTED BY THE REVE NUE. SINCE THERE WERE ASSETS FOUND DURING THE COURSE OF SEARCH VALUED AT RS.58,55,000/- WHICH PERTAINED TO THE UNDISCLOSED I NCOME, THE ASSESSEE EXCLUDED RS.2,41,07,376/- FROM CALCULATION OF NET PROFIT TAKEN AT 23% FROM THE TOTAL AMOUNT OF UNDISCLOSED S ALES OF RS.4,23,33,256/-. HOWEVER, THE LEARNED AO WORKED OU T RS.55,44,696/- BEING 23% OF RS.2,41,07,376/- AS UND ISCLOSED INCOME FURTHER TO BE ADDED TO THE INCOME OF THE ASSESSEE A LONG WITH THE UNDISCLOSED ASSETS FOUND DISCLOSED DURING THE COURS E OF SEARCH FOR RS.58,55,000/-. HOWEVER, THE LEARNED CIT(A) DELETED THIS ADDITION OF RS.55,44,696/- WITH THE FOLLOWING OBSERVATIONS: 13. THE ASSESSING OFFICER HAS MADE ADDITION OF UNEXPLAI NED INVESTMENT OF RS.2,41,494/- BEING DIFFERENCE BETWEE N DISCLOSURE OF ASSET OF RS.58,55,000/- DURING THE SE ARCH ON 12.8.97 AND DISCLOSURE OF RS.60,96,494/- ON 28.8.97 . THE APPELLANT HAS MADE DISCLOSURE OF RS.1,05,05,911/- D URING THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER . THUS, IT (SS)A NO.70/AHD/2000 (BLOCK PERIOD AY 1988-89 TO 12-08-1997) DCIT CENT. CIR-3, BARODA VS LATE MAHENDRA M. MAJITH IA 7 BOTH THE DISCLOSURES ARE INCLUDED IN THE FINAL DISC LOSURE OF RS.1,05,05,911/-. 9. THE LEARNED DR VEHEMENTLY ARGUED STATING THAT TH E ADDITION MADE BY THE LEARNED AO FOR RS.55,44,696/- SHOULD BE SUSTAINED TOGETHER WITH THE ADDITION FOR UNDISCLOSED INVESTME NTS MADE FROM UNDISCLOSED INCOME SINCE THE UNDISCLOSED INCOME OF RS. 55,44,696 CANNOT BE CONSIDERED TO BE UTILIZES FOR THE INVESTM ENT MADE FOR RS. 58,55,000/-. HE FURTHER PRAYED THAT THE ORDER OF TH E LEARNED AO MAY BE REINSTATED. 10. THE LEARNED AR ON THE OTHER HAND, STOUTLY OPPOS ED TO THE SUBMISSIONS OF THE LEARNED DR AND SUBMITTED THAT TH ERE WAS NO DISPUTE WITH RESPECT TO THE UNDISCLOSED CASH SALES OF RS.4,23,33,256/- AND THE INCOME COMPUTED THEREOF AP PLYING NET PROFIT RATE OF 23% TOGETHER WITH THE EXCESS AMOUNT OF INV ESTMENT MADE OVER AND ABOVE SUCH INCOME. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. BOTH THE REVENUE AND THE ASSES SEE HAS ACCEPTED WITH RESPECT TO THE UNACCOUNTED CASH SALES OF RS.4,23,33,256/- UNEARTHED DURING THE COURSE OF SEA RCH AND THE ASSESSEE HAS GRACEFULLY OFFERED NET PROFIT @23% ON THIS UNACCOUNTED CASH SALES AS UNDISCLOSED INCOME FOR THE BLOCK PERI OD. THE LEARNED CIT(A) HAS ALSO JUDICIOUSLY DELETED THE ADDITION OF RS.55,44,696/- SINCE RS 58,55000/- BEING UNDISCLOSED ASSET INVESTE D FROM IT (SS)A NO.70/AHD/2000 (BLOCK PERIOD AY 1988-89 TO 12-08-1997) DCIT CENT. CIR-3, BARODA VS LATE MAHENDRA M. MAJITH IA 8 UNDISCLOSED INCOME WAS ALREADY ADDED TO THE UNDISCL OSED INCOME OF THE ASSESSEE. OBVIOUSLY IF SUCH TREATMENT IS NOT ME T OUT THERE WILL BE MISCARRIAGE OF JUSTICE BY DUPLICITY OF ADDITION FOR RS, 55,44,696/-. CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE WE ARE INCLINED NOT TO INTERFERE WITH THE ORDER OF THE LEARNED CIT( A). ACCORDINGLY THIS ISSUE IS ALSO DECIDED AGAINST THE REVENUE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED ORDER PRONOUNCED IN THE OPEN COURT ON 31-08-2012 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 28-08-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 299-08-2012 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: